When Buying a House Expect Hidden Costs!

January 21, 2015

When Buying a House Expect Full Disclosure with Hidden Costs!

The issue of hidden costs when buying a house are more critical for first-time home buyers because they’re generally green when it comes to matters of real estate. Also, they tend to have the bare minimum down for that first home so costs that are hidden or extra may be even more overwhelming for them.

But doing your homework when buying a house and talking to your realtor is the best line of defense when it comes to what costs are lurking around the corner.

“Any good agent should be making buyers aware of all of the costs they have to deal when making a purchase,” says Rob Golfi, a sales representative with Remax Escarpment Realty. “Realtors in general are fairly well educated on these items and the buyer needs to be prepared for hidden costs. I do think it’s the responsibility of the realtor to let them know.”

Closing or hidden costs when buying a house vary depending on the price of the property, but are generally estimated to be three or four per cent of the purchase price. Clients should earmark at least a few thousand dollars for these costs.

Here is a list of the more unusual or lesser-known costs:

Mortgage application fee –Some lenders may charge a fee to process your mortgage application. However, with the highly competitive nature of the mortgage industry, many will waive the fee entirely, especially if you have other accounts with them.

Mortgage broker’s fee — If you use a mortgage broker to find you a lender, you may be charged a fee which is payable at the time of closing when the mortgage transaction is complete. In many cases, brokers are paid directly by the lenders, so you should ask the mortgage broker about who pays the fee.

Mortgage insurance — If you have a high-ratio mortgage, the government requires that it be insured against default and that you pay the cost of insurance. The cost to you ranges from .51 to 2.90 per cent of the mortgage amount and is added to the mortgage principal.

Home inspection — An independent look at the house and property can cost in the $350-500 range for most single-family homes.

Property survey – Always a good idea, but not always carried out. A land surveyor can make sure the buyer is getting the property they think they are buying. A surveyor can properly install property markers on the corners of the lot. With those, the buyer will know the precise boundaries.

Costs to have fireplaces, etc. inspected in order to be insured — Often insurance companies require fireplaces, solid fuel stoves, etc. to be checked by certified inspectors.

Water testing — For properties not on a municipal water system, most – if not all – financing institutions require the water source to be tested to ensure it meets standards for human consumption. Some areas also have compounds in the water the prospective buyer may wish to know about.

Well/pump testing — This test is to determine the volume of the water supply. Does the well recharge itself quickly enough for the needs of the buyer’s household? Is the pump working properly?

Rob Golfi of The Golfi Team is a Sales Representative with Remax Escarpment Realty Inc, your real estate expert servicing the Hamilton, Stoney Creek, Grimsby and surrounding areas. You can contact Rob at


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